FHA Needs Bailout From Treasury to Plug Budget, Bachus Says
The Federal Housing Administrationwill need billions of dollars in aid from the U.S. Treasurybefore the end of the year to fill a financial hole caused by defaults on mortgages it insures, House Financial Services Committee Chairman Spencer Bachus said today.
FHA will propose increases in the premiums it charges to insure mortgages as one solution to its financial problems, Bachus said during a press conference in Washington. Still, that won’t be enough to offset its near term need for cash.
The agency is “burning through” its last $600 million and FHA officials have briefed him that they will need a financial backstop within a month, the Alabama Republican said during a press conference in Washington.
“Because of the number of foreclosures, they’ve indicated they will have to come to the American people and ask for money,” he said.
A request for aid would be the first in the agency’s 78-year history, and could create political problems at a time when Republicans and Democrats are engaged in negotiations over how to solve the nation’s fiscal woes.
FHA does not need prior approval from Congress to receive a financial infusion from Treasury. FHA spokesman George Gonzalez declined to comment.
Bachus refrained from criticizing the government mortgage insurer in remarks after the press conference and blamed the agency’s losses on the economy.
Bad Economy
“These are just a wave of foreclosures which we obviously are not over,” Bachus said. “It’s basically a function of a bad economy.”
Bachus’s remarks came a day before the agency is scheduled to release its annual actuarial report, which is expected to project that losses from defaults on the loans it insured from 2005 to 2009 will exceed the value of its insurance fund. That report, which will provide a picture of the agency’s financial situation, is separate from any eventual request for a draw from Treasury.
In advance of the report, FHA officials have been publicly emphasizing the role the agency plays in the economy as a backer of home loans for low-income borrowers who do not have large down payments. Agency officials have been sending out messages on Twitter with the hashtag #FHAmatters.
FHA insures a portfolio of about $1.1 trillion in home loans and now backs 15 percent of U.S. mortgages for home purchases.
The agency provides liquidity to the housing market by insuring lenders against losses on loans with down payments as low as 3.5 percent. Lenders are made whole if the mortgages default. Unlike Fannie Mae (FNMA) and Freddie Mac, the mortgage finance companies operating under U.S. conservatorship, FHA doesn’t package loans into securities or guarantee principal and interest payments.
The government-backed mortgage insurer until now has covered its costs with revenue from premiums. In the past two years, it has raised premiums and tightened credit standards in an effort to avoid asking for a taxpayer subsidy.
To contact the reporters on this story: Clea Benson in Washington at cbenson20@bloomberg.net; Cheyenne Hopkins in Washington at chopkins19@bloomberg.net
To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net
AICPA Survey Reveals What Parents Pay Kids for Allowance, Grades
New York (August 22, 2012) — The average allowance provides a child enough money in a year to afford an Apple iPad and three Kindles and still have money leftover – money they’re most likely to spend. Indeed, only 1 percent of parents say their kids save any of their allowance.
Those are the findings of a national phone survey conducted for the American Institute of CPAs by Harris Interactive that explored what parents pay their children. The survey found that 61 percent of parents pay an allowance to their kids, with the majority, or 54 percent, beginning by the time their child was 8.While the amount varies by age, the average allowance totals $65 a month, or $780 a year. Nearly half of parents with kids in school, or 48 percent, also pay their kids for good grades. The average rate for an A: $16.60.
“These findings make clear that it can pay to be a kid,” said Jordan Amin, CPA, chair of the AICPA’s National CPA Financial Literacy Commission. “Parents need to make sure they’re also passing along financial sense with those dollars and cents. Earning, budgeting and saving are all important lessons that can be tied to allowances – lessons that can help put children on solid financial footing.”
The vast majority of parents do require their children to earn their allowance. Eighty-nine percent expect their children to work at least one hour a week and, on average, children put in 6.2 hours per week on chores. But money is not a top topic for conversation. According to the survey, parents are more likely to have talked with their kids about the importance of good manners, 95 percent, the benefit of good eating habits, 87 percent, the importance of good grades, 87 percent, the dangers of drugs and alcohol, 84 percent, and the risks of smoking, 82 percent, than about managing money wisely, 81 percent.
Children have broad flexibility with the money they receive. They most often use their allowances to buy toys or to hang out with friends, according to the survey, as parents handle other purchases. In fact, parents who pay an allowance are significantly more likely to also pay for discretionary items such as sport- and hobby-related expenses, mobile phone service, movie rentals and digital downloads. Nearly half of parents, or 47 percent, said they expect to financially support their child until age 22 or older.
“As parents, we feel a strong commitment to our children and ensuring they have all that they need to succeed,” Amin said. “One of the best gifts we can give them is a solid education on managing money.”
The National CPA Financial Literacy Commission offers these tips for parents:
Set parameters. If you decide to pay an allowance, make sure your children clearly understand why they are getting it, how to earn it and how to lose it. Some families, for example, condition allowance on the completion of specified chores and make deductions for those that aren’t finished. Others set a base allowance and provide bonus opportunities for extra chores that are completed. No matter your approach, make sure that you align payment with action so your kids understand that money must be earned.
Set goals. An allowance is a great gateway to budgeting. Rather than giving your children money to spend at will, consider an allocation process that rewards a focus on short- and long-term thinking. You could, for instance, allow your child to set aside 25 percent for short-term goals like a new game or toy and 25 percent for immediate or impulse decisions, like outings with friends. You require that the remaining 50 percent be set aside for long-term goals like college and match those dollars to reinforce the reward of saving.
Talk often. The more you engage your children in financial discussions, the more likely they are to learn lessons and make good money management part of their daily life as they get older. During dinner, talk about saving for a big purchase, such as a family vacation, and how it might impact the budget—where will you cut back to save? Ask them to weigh in and help you think through the options so they learn how to do the analysis.
In addition to these tips, the CPA profession has a comprehensive financial literacy program—360 Degrees of Financial Literacy—to help Americans achieve long-term financial success. A robust Web site (www.360financialliteracy.org) is the centerpiece of the program with tools, calculators and advice to help Americans understand and manage their financial needs during 10 life stages, from childhood to retirement. Another program Feed the Pig, created in conjunction with the Ad Council, provides tools, tips and resources specifically for youth and young adults.
Methodology Harris Interactive conducted the telephone survey on behalf of the American Institute of CPAs within the United States between July 12 and July 15, reaching a nationally representative sample of 1,006 adults aged 18 and older by landline and mobile phone. Of these respondents, 268 qualified as parents of children aged 25 years or younger living at home with them. For full results contact James Schiavone at 212-596-6119 or jschiavone@aicpa.org or Jonathan B. Cox at 919-402-4499 or jcox@aicpa.org.
How to Create a Budget with Your Spouse (And Stay Married)
Written By Erika // Budgeting, How To Guide, Personal Finance
For the past three to four months, we’ve actually been budgeting together, and it’s been working! We changed the way we handle the budget and this is what’s worked for us.
Start With A Clean Slate
We began a new approach to the way we budget. We swiped clean what we had been doing, since what we had been doing obviously wasn’t working. And we started fresh. We created a budget from scratch that suited both our needs and both our wants. Starting over meant we both got to have input into how our money is spent.
Patience
There were many times during our budgeting process that we would start to feel our temperatures rise and our cheeks flush. It was important to keep our emotions in check. It helped to plan our budget with a glass of wine to calm the nerves. And it also required a lot of understanding. A long-standing sore subject in our marriage is the amount of money he spends on food. I pack my lunch every day, whereas he is forced to pay for lunch and dinner every day per firehouse rules. It’s not his fault it’s a requirement. But it puts a big dent on our budget.
Allow Fun Money
We both came to the agreement of Fun or Free Money–money that can be spent any way we please and the other partner can’t say anything about it. If I want to go to happy hour with friends, I use my fun money. If Eric wants to spend his money on fast food even though we have perfectly good organic food at home, he’s free to do so and I can’t say anything about it–not one little thing. Obviously I’m not bitter about his choices, right? Of course.
Create Duties
We each have our own duties now when it comes to the budget. I budget the day to day in a notebook, and every week or two, we get together and my husband manages the monthly and yearly budget in our Excel Spreadsheet, making sure we’re on track. Having him in charge of the spreadsheet means he feels included in the process, rather than before when I would simply spew the numbers at him.
Remember Your Goals
We always like to set financial goals for ourselves. It helps us stay on track in those moments where we’re fed up of being frugal and really just want to splurge. Because of sacrifices we’ve made, we’ve been able to stick to a good portion of our financial goals, such as paying off credit card debt, contributing to our 401Ks, and paying off student loans.
Money is often cited as one of the number reasons for divorce. Don’t let finances ruin your relationship. Remember that you were both put on the same team to win. It’s not a contest or a his vs. hers. As they say, keep calm and carry on.
Spend now, save later: The financial mind of the modern single
by Lisa Bertagnoli
Today’s young singles are spending more and saving less than their married counterparts. Are they digging themselves a hole with no bottom or can a shift in the notion of how they spend, not why they spend, keep them in good financial health for the future?
A paper published in the U.S. Bureau of Labor Statistics’ 2011 Consumer Expenditure Survey Anthology highlights the gap between singles and marrieds when it comes to live-now spending.
According to the paper, singles ages 21 to 29 years old, without children, spend an average of $2,057 a year on restaurant meals (compared to $1,423 for marrieds of the same criteria), $660 a year on alcoholic beverages ($227 for marrieds) and $896 on clothing ($650 for marrieds).
Regarding savings, in 2010, only 49.8 percent of singles under 55 without kids had at least some savings, compared with 62.2 percent of couples without kids, according to the Federal Reserve Board’s Survey of Consumer Finances.
Marty Martin, a financial psychologist at Aequus Wealth Management in Chicago and a professor in the business school at DePaul University, posits that singles “are engaged in magical thinking — they think ‘I’ll start saving when I get into a committed relationship.’ Singles think, ‘I want to enjoy everything right now so I’m going to spend it all.'”
So as singles delay saving and keep their spending habits fast and loose, it doesn’t take much work to maintain their lifestyle while laying some foundation for long-term financial health. One basic tool for singles is to know their spending methods, their advantages, disadvantages — and how to make them work for you instead of against you.
Here’s a look:
Spending method: cash
Works best for: Eating out and for small purchases.
It’s the best way to stick to a budget: load your wallet with a certain amount, and when it’s gone, you’re finished shopping or eating.
“You’re more aware of what you’re spending,” says Joe Lucey, president of Secured Retirement Advisors, a retirement planning firm in St. Louis Park, Minn. And Martin says, “If you do cash-and-carry and you’re not carrying consumer debt, in the here-and-now you are engaged in financially healthy behavior.”
Another advantage is that some merchants offer a discount with cash, adds Sandy Shore, spokeswoman for Freehold, N.J.-based Novadebt, a credit card counseling agency.
Cash’s big disadvantage is that if it’s lost or stolen, there’s no recourse.
Spending method: PayPal
Works best for: Buying online.
Fans of e-boutiques such as Etsy and eBay — where numerous individuals are selling goods — should consider paying with PayPal. Why? PayPal, which transfers money from the user’s bank account or PayPal account to the receiver, is more secure than a credit card: Merchants get their money and never see your credit card digits or any of your personal information, explains Lucey.
PayPal costs buyers nothing to use (though merchants do pay a fee) and also allows buyers to pay for items in foreign currency.
Spending method: credit cards
Work best for: singles who like to travel, especially if using a card that accrues rewards such as miles or hotel points, which can make travel more affordable and more comfortable.
Some rewards cards have an annual fee; the key is to make sure you’re recouping that fee in airline tickets, hotel upgrades or other benefits and using the rewards before they expire.
Credit cards can also get users out of a jam, says Shore. One example: Shore’s sister booked a 10-day cruise, which was cut short by five days because the cruise ship company went bankrupt. The trip insurance turned out to be useless, but the credit card company reimbursed her for half the trip.
Some credit cards also cover part of the insurance on rental cars. Such protection “is a very big reason to use a credit card if you can pay off the balance every month,” she says.
Another benefit to using credit cards: They can help a young single build a credit rating, which will come in handy when it’s time to apply for a mortgage or a car loan. “You never know when you’ll need credit,” Shore points out.
Spending method: debit cards
Works best for: travel on a budget.
If you’re taking a lengthy trip and want the ease and security of plastic, but not the temptation to overspend, Shore recommends setting up a checking account stocked with the vacation’s budget, then using a debit card linked to that account.
Use the debit card as a credit card — make purchases without keying in your PIN — for an extra layer of security. Record spending so you know how far you’ve dipped into your vacation budget.
Spending method: don’t spend, save
Works best for: everyone.
No matter how they choose to pay for their indulgences, the bottom line for singles is to save at least something.
By not saving, singles “don’t realize they’re stealing from their future,” says Mary Hunt, a financial columnist and author of “7 Money Rules for Life.” “They sometimes feel that the regular money rules don’t apply to them.”
Those rules? “Stop spending money you haven’t earned,” Hunt says. “Don’t borrow more than you can pay — that eliminates credit card debt.” Save part of everything you earn, she adds, and be willing to donate some to charity “to get balance.”
Problems Riddle Moves to Collect Credit Card Debt
The same problems that plagued the foreclosure process — and prompted a multibillion-dollar settlement with big banks — are now emerging in the debt collection practices of credit card companies.
As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.
Lenders, the judges said, are churning out lawsuits without regard for accuracy, and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.
“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a civil court judge in Brooklyn, who said he presided over as many as 100 such cases a day.
Last year, American Express sued Felicia Tancreto, claiming that she had stopped making payments and owed more than $16,000 on her credit card.
While Ms. Tancreto was behind on her payments, she contested owing the full amount, according to court records. In April, Judge Dear dismissed the lawsuit, citing a lack of evidence. The American Express employee who testified, the judge noted, provided generic testimony about the way the company maintained its records. The same witness gave similar evidence in other cases, which the judge said amounted to “robo-testimony.”
American Express and other credit card companies defended their practices. Sonya Conway, a spokeswoman for American Express, said, “we strongly disagree with Judge Dear’s comments and believe that we have a strong process in place to ensure accuracy of testimony and affidavits provided to courts.”
Interviews with dozens of state judges, regulators and lawyers, however, indicated that such flaws are increasingly common in credit card suits. In certain instances, lenders are trying to collect money from consumers who have already paid their bills or increasing the size of the debts by adding erroneous fees and interest costs.
The scope of the lawsuits is vast. Some consumers dispute that they owe money at all. More commonly, borrowers are behind on their payments but contest the size of their debts.
The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.
At times, lawsuits include falsified credit card statements, produced years after borrowers supposedly fell behind on their bills, according to the judges and others in the industry.
“This is robo-signing redux,” Peter Holland, a lawyer who runs the Consumer Protection Clinic at the University of Maryland Francis King Carey School of Law.
Lawsuits against credit card borrowers are flooding the courts, according to the judges. While the amount of bad debt has fallen since the financial crisis, lenders are trying to work through the soured loans and clean up their books. In all, borrowers are behind on $18.7 billion of credit card debt, or roughly 3 percent of the total, according to Equifax and Moody’s Analytics.
Amid the surge in lawsuits, credit card companies are facing scrutiny. The Office of the Comptroller of the Currency is investigating JPMorgan Chase after a former employee said that nearly 23,000 delinquent accounts had incorrect balances, according to people with knowledge of the investigation.
Linda Almonte, a former assistant vice president at JPMorgan, claimed in a whistle-blower complaint that she had been fired after alerting her managers to flaws in the bank’s records.
The currency office, which oversees the nation’s largest banks, is also broadly looking into the industry’s debt collection efforts, focusing in part on the documents included with lawsuits. A spokeswoman for JPMorgan declined to comment.
The Federal Trade Commission is working with courts across the country to improve the process for pursuing borrowers who are behind on their credit card payments, mortgages and other bills. In a recent review of the consumer litigation system, the commission found that credit card issuers and other companies were basing some lawsuits on incomplete or false paperwork.
“Our concerns center on the fact that debt collection lawsuits are a pure volume business,” said Tom Pahl, assistant director for the F.T.C.’s division of financial practices. “The documentation is very bare bones.”
The lenders disputed the suggestion that they file lawsuits that include flawed or inaccurate documentation.
“We look at account records in our system to individually verify the accuracy of information before affidavits are filed and testimony is given,” said Ms. Conway, the American Express spokeswoman, who declined to comment on specific borrowers.
The industry has faced similar criticism over practices stemming from the housing crisis. Amid a surge in foreclosures, state attorneys general accused the banks of using faulty documents without reviewing them and improperly seizing homes. In February, five big banks agreed to pay $26 billion to settle the matter.
The errors in credit card suits often go undetected, according to the judges. Unlike in foreclosures, the borrowers typically do not show up in court to defend themselves. As a result, an estimated 95 percent of lawsuits result in default judgments in favor of lenders. With a default judgment, credit card companies can garnish a consumer’s wages or freeze bank accounts to get their money back.
In 2010, Discover sued Taryn Gregory for more than $7,000 in credit card debt. Ms. Gregory, of Commerce, Ga., had fallen behind on her bills, but said she had accumulated only $4,000 in debt.
After the suit was filed, Ms. Gregory, a 41-year-old child care assistant, asked Discover for proof of the balance. The resulting documents, which were reviewed by The New York Times, have inconsistencies. One statement, for example, says it was produced in 2004, but advertisements on the bottom of the document bear a 2010 date.
The lawsuit against Ms. Gregory is still pending. Discover declined to comment. Judges have also raised concerns about witnesses and affidavits.
In May, Michael A. Ciaffa, a district court judge in Nassau County, N.Y., challenged the paperwork signed by a Citigroup employee in Kansas City, Mo. He found that one document “has the look and feel of a robo-signed affidavit, prepared in advance,” according to court records. The case is still pending.
Emily Collins, a spokeswoman for Citigroup, said: “We continually review the effectiveness of our controls and policies for credit card collections, and ensure that affidavits are validated for accuracy and signed by Citi employees with knowledge of the client’s account. Citi Cards has a range of programs to support our clients who may be facing financial difficulty, and we make every effort to work with our clients to prevent delinquency.”
A review of dozens of court records showed that the same employee signed documents in cases filed against borrowers in three other states. In one lawsuit in Seattle, the employee attested in an affidavit in May that a customer, Vickie Sawadee, owed $14,000 on her Citigroup credit card. Although Ms. Sawadee was behind on her payments, she said she does not owe the full amount. She hired a lawyer to defend her case.
Many judges said that their hands are tied. Unless a consumer shows up to contest a lawsuit, the judges cannot question the banks or comb through the lawsuits to root out suspicious documents. Instead, they are generally required to issue a summary judgment, in essence an automatic win for the bank.
“I do suspect flaws,” said Harry Walsh, a superior court judge in Ventura, Calif. “But there is little I can do.”
Chase makes loan modifications easier
Chase makes loan modifications easier
by Kimberly Miller
Palm Beach Post
JPMorgan Chase is reducing home loan interest rates and cutting mortgage debt balances with nothing more than a homeowner’s signature, and sometimes even that isn’t required
No more faxing documents over and over again or waiting months for an answer.
The plan, which is ramping up nationally for eligible Chase-owned loans, is so easy that some homeowners think it’s a hoax.
When a client of Wellington foreclosure defense attorney Malcom Harrison got a letter from Chase offering to cut his interest rate and loan debt without a lengthy paperwork exchange, he brought it to the office to see if it was authentic.
“He asked if it was for real or a joke,” Harrison said. “After some checking and phone calls we verified it was for real.”
Nearly 8 percent of Chase’s home loans are in Florida.
Chase’s program has two main components. Homeowners whose mortgage payments are seriously delinquent may get a letter offering them a lower interest rate, principal reduction or both, and all they have to do is sign and return the offer.
It’s even easier for homeowners who owe more on their mortgage than their home is worth but have been current on their payments for at least a year. Chase will reduce the interest rate on its own, sending the homeowner their new lower payment amount with no effort needed on their part.
The average savings is $300-a-month for homeowners current on payments.
“Chase is taking a proactive approach to helping homeowners,” a statement from the lender said. “We are sending modification offers, many of which include principal forgiveness, to thousands of families that are struggling with their mortgage payments.”
Chase is part of the 49-state attorneys general settlement announced in February, which requires it to provide about $4.2 billion in mortgage relief to homeowners. Nationally, the $25 billion deal with Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial could provide up to $40 billion in cash, refinances and principal write-downs to homeowners.
Harrison said the settlement is one motivator, but that lenders are also realizing it’s better to have a functioning loan than another foreclosure on their books.
Chase gave another client of Harrison’s a $152,000 debt reduction on his mortgage and lowered his interest rate to 3 percent.
“I think they are becoming more realistic about the real estate and job market,” Harrison said. “At the end of the day it’s always, always better to have a performing loan.”
Mortgage-To-Lease Program
Citi Pilots Mortgage-To-Lease Program In Six Troubled Markets
Citigroup (NSYE: C) is rolling out a pilot program with Carrington Capital Management that would allow several hundred distressed homeowners to stay in their homes as renters.
The Home Rental Program, announced Wednesday, would give eligible borrowers who are delinquent on mortgage payments the option to transfer the property back to the bank and instead pay rent each month.
The mortgage deed would be transferred to Carrington Capital and joint venture partner Oaktree Capital Management, which would service the loans. Citi’s mortgage unit has sold $158 million of mortgages to Carrington and Oaktree to implement the deal.
“CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners,” Sanjiv Das, chief executive officer of CitiMortgage, said in a press release Wednesday. The program “offers eligible borrowers an option to remain in their homes while avoiding the disruption of foreclosure.”
“Managing a program of this nature is not within our area of expertise, so we joined with Carrington, one of the best property management companies in the country, to help make this program work,” he added.
Largest Settlement Since Tobacco
Television PSAs, Homeowner Help Website, New Mortgage Assistance Guide launched to educate homeowners about resources available to them through historic mortgage servicing settlement
How to Talk with Your Spouse About Money
This is a guest post from Sierra Black, a long-time GRS reader and the author of ChildWild, a blog where she writes about frugality, sustainable living, and getting her kids to eat kale.
Talking about money is one of the great taboos of our culture. I know more about my friends’ sex lives than I do about their bank statements. Many of us find it hard to discuss finances under the best circumstances. When we’re stressed about money, we tend to clam up even more.
If you’re married (or living with a partner), you don’t have that luxury. Financial success is not a private affair. You need to talk to your spouse or partner about your money. This is vital for both the health of your relationship and the health of your bank balance.
You don’t have to take my word for this. This week, I had the pleasure of interviewing Lou Scatigna, a.k.a. The Financial Physician. An entire chapter of his new book is devoted to “lack of spousal communication”.
How big a problem is failing to talk to your spouse about money? “If you have money conflict, your marriage is doomed,” Scatigna says.
OUCH! My husband and I have our share of differences when it comes to handling our dollars, and I’d like to stay married. In addition to genuinely liking the guy I married, divorce is expensive.
The monthly family finance meeting
Scatigna’s prescription for this ailment? Have a monthly family finance meeting. Scatigna says its vital for both partners to sit down together once a month and pay all their bills together. Even if you’ve automated many of your monthly bills with an electronic bill pay system, you need to be looking at them each month. Doing this together has a lot of advantages:
- You both know the real cost of living in your household. When only one partner handles the finances, the other can be genuinely unaware of how much credit card debt your family is carrying, or how high the winter heating bills are. This is information you both need to have.
- You can hold each other accountable to shared financial goals. It’s harder to justify an extra latte when you know you have to own up to your spending at the end of the month.
- Working together can make it fun. Instead of a tiresome chore, handling the finances can become something you do together. Finding ways to save can become something of a game, and as you get better at it you’ll both reap the rewards.
- Having both partners fully up to speed on the household management protects you both from being left in the lurch should the other suddenly not be available. People die or suffer sudden illnesses, and the business of life goes on. You don’t want to have to learn how to pay your home’s monthly bills while you’re handling a family crisis.
I’m a long-standing believer in the theory of a monthly household finance meeting, but I also know it’s a lot harder to practice than it is to theorize about. Scatigna says it’s the rare couple that actually sits down and talks about finances every month.
Making the time to talk
Managing finances together sounds simple, but there are a lot of stumbling blocks. People are busy. You’ve got a career, a family, maybe kids of your own, plus friends and hobbies. Spending an evening a month on a boring chore can seem like a lot to ask.
Plus, money pushes a lot of buttons for people. It brings up fear, anxiety, guilt, anger. A lot of negative emotions most of us like to avoid. So we avoid talking about money with our spouses until it explodes in a financial disaster or a relationship meltdown.
Even when we do sit down to talk, it can be hard to make good use of the time. Should you discuss long-term goals or just go over this month’s bills? How can you avoid spiraling into a fight?
My husband and I have been in a groove with this lately. To get started, we sat down and worked out a master list of financial goals. We also made a huge spreadsheet of our fixed and flexible expenses. We use these as guides when we’re looking at how cash flowed in and out during the month.
Here’s a list of do’s and don’ts that are working for us:
- Don’t spring a big money talk on your spouse by surprise.
- Don’t talk about it when you’re already angry. Just got a surprise overdue notice for that parking ticket your honey forgot to tell you about? Don’t call her up at work to complain about it.
- Don’t talk about it after midnight. My husband and I tend to leave money talks for the end of the day, and wind up trying to deal with it when we’re both exhausted and edgy.
- Do set a specific time to sit down and discuss your finances. If you expect the conversation to be difficult, try scheduling two dates at once: one to talk about money, and another one a few days later to do something fun you both enjoy.
- Do have an agenda. We’ve wasted many household money talks staring at each other over a pile of bills and not knowing what to do. Now we have a pretty clear routine: go over each spending category on our spreadsheet, look at how much we spent, figure out if we can cut back on it at all in the coming month, and check in about how that fits into our big-picture money goals.
- Do be gentle with each other. Scatigna warns that in households where one spouse pays the bills, that partner can become resentful for having to carry all the weight. That was certainly the case in our house, but once I learned to control my temper about it, my husband became much more willing to come to the table and get involved.
While cooking dinner or getting ready for work is not the time to have this conversation.
Talking about money really has eased tensions between us. It’s also helped with our cash flow. We’re on the same page a lot more often. We’re both paying more attention to the kinds of details that used to cost us a lot in mistakes or careless spending. We feel like a real team, and we’re actually saving money.
DEBTHELPER.COM 